Since the first moment of September’s trading, virtually every equity index and commodity has raced higher. If I knew nothing about anything I would say that a new Bull Market was being birthed. But maybe I know too much…
Anyhoo, the fundamental backdrop of the country,economy and markets remains the same as it was two months ago when the market was on the see-saw. Yet something has happened.
I love to hear the perma-bulls or perma-bears on TV. Most have not a clue as they are mired in indicators that went stale in 1999. Markets have changed a lot since straight-up technical analysis worked as the primary trading tool and mechanism. Take your “Edwards & Magee” and throw it away, because it needs a re-write.
Sentiment readings mean nothing because most every marginal investor is out of the stock market. Speculators have given up. Pimco has their money in safekeeping. The only folks left are the long-holders. the prop-traders and the algos. The long holders must have equity exposure as per their mandate. Even if the sun went Supernova, they would not sell. The prop traders will trade whichever way the wind blows and they will spin on a dime. They don’t give a shit about fundies or anything else for that matter. They are just trading against their customers (just my opinion!). And the algo’s trade off of Forex, period. So who’s left? The doom and gloomers.
They know how miserable everything really is, because they are “realistic”. They know the market is rigged and that prices are unsustainable. It’s all a sick joke and Zero Hedge has them digging their bomb shelters.
Listen, I’m sure we humans will kill ourselves one day. But that day is not today. Nor will it be tomorrow. The stock market has spent six months consolidating and driving out the marginal stock investor who has simply given up.
There are still October hedges out there that must “burn” like September’s. It is the end of the quarter. It is about to be earnings season. It is the historically best time of the year. The election is close. The yearly highs are in sight. The coast is clear.
You should be positioned for this as it has been all we’ve talked about for months. Now that you know, it’s time to begin thinking about how this ends. But we’ll save that for another day…
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You might have just convinced me. That, and today’s action.
Get out da way…
But converting you is a contra-indicator, right?
naaah i got long with you at 1040! I just got cautious up here in the nosebleeds. I’m hoping for a selloff to get long again (ideally around 1115), but I’m not expecting any major trip back below 1080.
kewl…Now, if we can just get the VXX to about $14, we’d have a shot at a decent sell off…
Scott, you don’t see a VXX HALLOWEEN coming?
Alot can happen in a month! Wouldn’t you agree?
Great calls, Scott. You helped give me the confidence to get long since 1040, though I’ve taken profits on a couple of trades and gotten stopped out of a couple of others. I’m long MMR, BP, CREE, IRM, CHS and one or two more. It’s taken long to do it, but I’m long. But I’m also hedged via VXX and TLT now. So here’s my question: If earnings start coming in soft, what’s to hold this market up? And what’s your near term target for the SPX? Seems like 1150 is an important number, and the bulls have to hold it.
Scott, that was an awesome post. You are very astute on what the market has become. I agree, t/a won’t work, at least not as well as it used to, and for a long time to come. To make money now, we have to anticipate what the “house”, ie brokers, prop-traders, algos and other assorted criminals will do, based on overbought/oversold, seasonals, earnings, etc…and NOT on every blessed economic number that is front-run, manipulated and gamed long before it is released.
Heck, when my trial runs out, I may even subscribe to you! I can always use intelligent confirmation of my own take on the markets, or a heads-up on something I may have missed…
You will be welcome at any time!
I think some smart money is/will come back into the market. People I know are tired of making .05% on their money funds. Where else are you gonna go? That, and there does not seem to be much more loose money that will walk away.
Food for thought
SPY close 09/20/10 114.21
SPY close 09/27/10 114.27
You are correct in many ways.
My time reference for holding stocks has changed over the years. I have been trading since ’82 (started with Fidlity Select Sector funds when they had 4 of them and hourly quotes) and full time since ’99.
Trends used to take months to develop and then it went down to weeks and now it’s days, if not hours. The computer has changed everything. I even traded with one of the earlier internet brokers (named Lomabard) and their rate was $35.00. Now I use IB which is for pennies.
I used to hold stocks for 6 months or longer but now strictly daytrade and although I have 5 computer pages of quotes and indicators I watch, I only trade a few equities and they are mostly etfs over and over again.
I stay out of the way of the HFT TradeBots best I can.
It’s not as enjoyable as it used to be.
The Fly ends right here and now
We are but guests in the good Doctor’s house…
Therefore, we are all ladies and gentleman here…
It’s all in good fun
You are truly a gentleman to put it like that. Long live the Doctor.
“Sentiment readings mean nothing because most every marginal investor is out of the stock market. Speculators have given up. Pimco has their money in safekeeping. The only folks left are the long-holders. the prop-traders and the algos. The long holders must have equity exposure as per their mandate. Even if the sun went Supernova, they would not sell. The prop traders will trade whichever way the wind blows and they will spin on a dime. They don’t give a shit about fundies or anything else for that matter. They are just trading against their customers (just my opinion!). And the algo’s trade off of Forex, period. So who’s left? The doom and gloomers.”
jesus h christ Scott. That was fucking fantastic. The whole piece, not just this quote. Well said and so treu.
SPYDER!
shucks. just peeled it off the top of me head…
The coast is clear right before a tsunami strikes also.